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The skirmish between VMware and Microsoft for greater control over the virtualization and cloud markets is only going to get bigger and more intense in 2012. Microsoft has been encroaching on VMware's dominance in the server virtualization platform market for the last few years, with its best opportunity yet to come with Hyper-V 3.0 and Windows Server 8. At the same time, VMware has been refusing to relax with its vSphere domination, and instead has been moving into Microsoft's "territory" in the management space through acquisitions as well as its own in-house created applications.

Last week seemed to be Microsoft's turn to fire a volley, with the announcement of a new System Center 2012 suite offering. The solution provides companies with the ability to build and operate private clouds so they can deliver business applications across both private and public cloud environments. While the software is currently only a release candidate, it does set the tone and make clear where Microsoft intends to take things.

System Center 2012 integrates eight separate components into a single unified solution, incorporating Virtual Machine Manager, Operations Manager, Configuration Manager, Data Protection Manager, Service Manager, EndPoint Protector, App Controller, and Orchestrator. That, according to Microsoft, helps streamline installation and reduces the time it takes to deploy from days down to hours.

In addition to the technology that makes up the suite, and perhaps even more eye opening, was Microsoft's announcement of a more simplified licensing and pricing mechanism. Microsoft has been taking aim at VMware with regard to pricing for quite some time. Remember back during VMworld 2008 when Microsoft's www.vmwarecostswaytoomuch.com campaign hit the Vegas strip, only to backfire on Microsoft with end users and industry pundits? Again late last year, the Redmond giant went on the offensive after VMware's own pricing fiasco took place with the release of vSphere 5, when VMware's community of users were alarmed and upset with the pricing change.

Microsoft's new packaging should prove to be a major differentiator. While VMware is leaving behind physical CPU-based pricing in favor of pricing things on a per-VM or per-virtual-resource basis, Microsoft is sticking with pricing based on physical processors. Only history will judge, but for now people seem to be in favor of one camp or the other depending on how their resources shake out and how much it will cost them in the end.

Microsoft is also moving toward a model in which there are just two editions of System Center 2012 to replace the dozens of combinations that have been offered in the past. These two editions will include all the primary components needed to build private clouds, and it comes at a critical time for Microsoft as they try to position System Center as the primary tool for managing both private and public clouds.

Customers will be able to choose between the Standard and Datacenter editions of the product, based on their virtualization requirements. The low-end Standard Edition license is offered at an attractive price for customers who are small and lightly virtualized. It covers two physical processors and up to two of what Microsoft calls Operating System Environments (OSEs). As virtualization density levels reach beyond the "lightly virtualized" stage, customers can move up to the Datacenter Edition, which offers cross-platform virtualization management for an unlimited number of VMs per physical host. With the Datacenter Edition and unlimited VMs, customers can feel confident in growing their private clouds without the need for additional licensing costs.

While Microsoft seems to be making great strides with System Center 2012, it isn't quite there just yet. Of the eight components that make up the suite, five are currently in a release candidate stage while the other three are still in beta. However, there's still time for all eight components to fully bake, as the final software isn't expected to ship until sometime in the first half of the year. Microsoft hasn't offered a specific launch date for the final version of System Center 2012, but more information should be forthcoming in April to coincide with Microsoft's annual Management Summit conference.

Microsoft knows they need to be very active in the cloud. And System Center 2012 will be one of its bigger power plays this year.